Financial hardship must be considered when deciding dispensation of pre-deposit; refusal without it is an improper exercise of discretion.

While deciding an application for dispensation of pre-deposit under Section 35F of the Central Excise Act, the appellate authority was required to consider pleaded financial hardship, because hardship is a material factor in waiving or reducing pre-deposit. A refusal based only on a prima facie view that the adjudication was correct, without addressing that relevant consideration, amounts to an improper exercise of discretion. The rejection of dispensation was therefore unsustainable and was set aside, with the application directed to be reconsidered afresh in accordance with law.

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Issues: Whether the appellate authority, while deciding an application for dispensation of pre-deposit under Section 35F of the Central Excise Act, 1944, was required to consider the appellant's plea of financial hardship.

Analysis: The order rejecting dispensation was founded only on a prima facie view that the adjudication was correct. It did not examine the pleaded financial hardship, although such hardship is a material consideration in deciding whether to waive or reduce the requirement of pre-deposit. An order passed without addressing that relevant consideration reflects an improper exercise of discretion.

Conclusion: The refusal to dispense with pre-deposit was unsustainable and was set aside. The application was directed to be reconsidered afresh in accordance with law.

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